Wednesday, April 01, 2009

Bike Commuter Tax "Benefit"

OK, so as part of last year's "stimulus" package, something called the "Commuter Tax Benefit" was extended from mass transit commuters to Bicycle Commuters. By the way, the writer of this blog commutes on bicycle to work quite often. It's only for $20 a month, which doesn't pay for a ton, but hey, that means I never have to worry about having the dough for some spare tubes, eh? Maybe I can throw it all at a nice set of lights or a helmet or some shoes. Yup, it's looking better and better. But it's up to the company to offer it, it's not something I can set up for myself. Dang it! I would have gotten away with it if it hadn't have been for those meddling kids, and their dog too! But I digress.
Then I noticed a glitch in our local HR's web site where for one afternoon, there was a banner headline about a "Commuter Savings Account." Of course it was gone the next day, and the link never went to anything. Shortly thereafter, I was contacted by a buddy of mine who's a journalist for the Dallas Morning News. He was researching it and he knew that I rode a bike. So I really looked hard into it. Here's what I found out so far.
OK, the "Commuter Tax Benefit" has actually been around for a while. The original law was drafted to give tax incentives to big companies to offer fringe benefits to employees tax-free. Note that the companies still had to fund the bene's, but now they could fund them tax-free on their part. So it would encourage (theoretically) the employers to offer more bene's in lieu of or in addition to salary. There are several sections of it including moving expenses, retirement planning services, and a fringe bene for folks who's home valuation is adversely affected by a military base closure. The transportation section is focused on parking and mass transit costs and is just now being opened up to bike commuters. Please note that no employer is obligated to offer any of these cash benefits. In 1998, the law was amended to allow employers to offer these benefits in a different manner. Instead of funding a cash benefit, it allowed employees to set aside money from their own paychecks as pre-tax dollars, then draw upon those accounts to pay for these qualified costs. If you are an employer, which would you choose, to offer free money to your employees? Or to offer your employees the chance to bank away their own money tax-free? Hmmm... Not a hard choice. Fund the management of the plan instead of funding the plan itself. So instead of bicycle commuters looking for a cash benefit, now the best they can expect in some circumstances is a tax-free reimbursement. If their employers offer it. And so far, mine doesn't. Actually, I didn't expect it. We've got thousands of locations, some with hundreds of employees and some with only a dozen or less. It sound like a nightmare to manage that plan. And the taxes that I pay on $240 are next to nothing. OK, with six kids and 14 dependents on my W4, it is nothing. It would have been nice to have as a bike-stuff-in-a-pinch security blanket, but I don't see anything suggesting that it's going to happen soon, or at all.
So I'll just have to ride my bike in order to ride my bike, like I always have.

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